Steve Rattner Agrees to $10 Million Settlement in Kickback Suit

Steven Rattner, the financier and former White House car czar, has agreed to pay $10 million to the state of New York as part of a settlement of a bitterly fought lawsuit filed by Attorney General Andrew Cuomo.

Associated Press

Cuomo, soon to be the governor of New York, last month sued Rattner alleging he paid kickbacks to obtain $150 million in pension-fund investments for Quadrangle Group, the private-equity firm co-founded by Rattner

In a news release today, Cuomo’s office said the $10 million is a “restitution to the State of New York.” Rattner also will be “banned from appearing in any capacity before any public pension fund within the State of New York for five years.”

Both Rattner and Cuomo had dug in their heels over the pension-kickback charges. Rattner said in a TV interview that the attorney general’s conduct in the case was “close to extortion.” Cuomo had been seeking Rattner’s lifetime ban from the securities industry in New York, a penalty Cuomo said was justified by the “fact that Rattner engaged in fraud and refused to answer 68 questions based on his fifth amendment privilege.”

It looks like each side gave in a little. Rattner’s penalty, while severe, could have been much worse if he lost the lawsuits; Cuomo was seeking $26 million from him. Rattner also struck a conciliatory tone, saying in a statement that, “I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult.”

“I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation,” Cuomo said in a statement.

Mr. Rattner will pay $10,000,000 in restitution to the State of New York and be banned from appearing in any capacity before any public pension fund within the State of New York for five years. The agreement today will end the two lawsuits previously filed against Mr. Rattner by the Attorney General’s Office in New York State Supreme Court relating to the circumstances surrounding $150 million in investments in Quadrangle from the New York State Common Retirement Fund (“CRF”).

Attorney General Cuomo stated: “I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation. The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund.”

In a statement issued in conjunction with today’s agreement, Mr. Rattner stated: “I am pleased to have reached a settlement with the New York Attorney General’s Office, which allows me to put this matter behind me. I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult. I respect the work of the Attorney General and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers.”

With today’s agreement, Cuomo’s investigation has secured agreements with nineteen firms and five individuals, garnering over $170 million for New York and the pension fund. The investigation has led to eight guilty pleas, including pleas by former Comptroller Alan Hevesi, his chief political consultant, and his Chief Investment Officer.

BACKGROUND INFORMATION

Last year, Cuomo announced his Public Pension Fund Reform Code of Conduct, which, among other things, bans investment firms from compensating intermediaries for introductions to public pension funds.

These firms collectively have agreed to return more than $100 million associated with pension fund investments; these funds will principally be provided to the pension fund for the benefit of the pension holders.

Payments from individuals, including criminal defendants, bring that total to over $170 million for the pension fund and the State.

Attorney General Cuomo’s investigation into corruption at the pension fund has led to a number of criminal charges and eight guilty pleas to date, including guilty pleas by the following individuals: former Comptroller Alan Hevesi; Hevesi’s former paid political advisor Henry “Hank” Morris; former Chief Investment Officer at the Office of the State Comptroller David Loglisci; former Liberal Party Chair Ray Harding; investment advisor Saul Meyer; hedge fund manager Barrett Wissman; unlicensed placement agent Julio Ramirez; and venture fund manager Elliott Broidy.

Comments (5 of 10)

The Car Czar has been working hard to turn things around. Has anyone seen him on Morning Joe - he's a really smart guy.

2:44 pm January 20, 2011

Shame on Attorney General Andrew Cuomo. wrote :

I for one am very thankful to Mr.Rattner and the hard working people that SAVED the auto industry. I did work for GM and put in many years and am enjoying a great retirement.If the mean spirited opposition had there way myself and thousand of others would be OUT OF LUCK. Again I support and am very thankful for all the hard work Mr.Rattner did to help us (middle class)This slur on his integrity is shameful.

12:48 pm January 5, 2011

upset in detroit wrote :

how about $150 million restitution AND MORE to the country's automotive industry, suppliers, and all honest businesses down the pike, etc. honest is the key. there is no honesty out there. housing in this country is devestated.
the american dream is no more.
sue the banks, wallstreet, goverment, insurance companies, esp. health care, etc., and all scammers....
fire all government....like the u of m coach....

7:30 pm December 31, 2010

Mons Grapius wrote :

G.M = Government Motors - for that I will never by another General Motors Vehicle again, and my Grandfather worked for them.

7:26 pm December 31, 2010

Mons Grapius wrote :

Solution was there;
3 trillion
Michigan, Illinois, or Newark New Jersey are you any better today than under the last admin?..., nope it's worse and it falls on this Administration.
3 trillion should have be reinvested, not used as pay offs for the 78 million dollars the SEIU gave for this
administration's election campaign. If the money was taken and used to purchase properties in abandoned factories in Newark, Michigan and other slums. Then sold at no interest to small or large business' the factories making products in the United States for the United States and the world. This would stimulate those areas and help eliminate poverty.
(The only control that is necessary; is to control of this Administrations want of power.)
As opposed to the system put in play by this administration that has grown poverty instead of helping people solve their problems.

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